<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q



                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934



      FOR THE QUARTER ENDED September 30, 1996 COMMISSION FILE NO. 1-7949
                            -----------------                      ------

                            REGENCY AFFILIATES, INC.
                            ------------------------
             (Exact Name Of Registrant As Specified In Its Charter)

            Delaware                                    72-0888772
            --------                                    ----------
    (State or other jurisdiction of                   (IRS Employer
    incorporation or organization)                  Identification Number)

   10 Winged Foot Drive, Novato, CA                              94949
   --------------------------------                              -----
   (Address of principal executive offices)                   (Zip Code)

   10842 Old Mill Road #5, Omaha, Nebraska                       68154
   ---------------------------------------                       -----
   (Address of administrative offices)                        (Zip Code)

 Registrant's Telephone Number (executive office) including Area Code: 
(415) 883-8046
--------------
 Registrant's Telephone Number (administrative office), including Area Code:  
(402) 330-8750
--------------

         Registrant's Principal Executive Office has changed since the last Form
10-Q. The address of the Registrant's Principal Executive Office was formerly:
381 Robinwood Lane, Wheaton, IL 60187.

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                Yes   X             No
                    ----              ----

         Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date.

$.40 Par Value Common Stock- 11,422,331 shares as of October 31, 1996.

                                        1

<PAGE>   2




TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION

<S>               <C>                                                                                            <C>
Item 1.           Financial Statements...........................................................................3

Item 2.           Management's  Discussion  and  Analysis  of  Financial Condition and Results of
                  Operations.....................................................................................13

PART II -- OTHER INFORMATION

Item 1.           Legal Proceedings..............................................................................15

Item 2.           Changes in Securities..........................................................................15

Item 3.           Defaults Upon Senior Securities................................................................15

Item 4.           Submission of Matters to a Vote of Security Holders............................................15

Item 5.           Other Information..............................................................................15

Item 6.           Exhibits and Reports on Form 8-K...............................................................15
</TABLE>



                                        2

<PAGE>   3



REGENCY AFFILIATES, INC.

PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS


         The following pages contain the information required by Part I, Item 1.

                                        3

<PAGE>   4



                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET


<TABLE>
<CAPTION>
                                                                                SEPTEMBER 30, 1996         DECEMBER 31, 1995
ASSETS                                                                             (UNAUDITED)
<S>                                                                                    <C>                       <C>       
CURRENT ASSETS
 Cash and cash equivalents                                                             $ 2,521,300               $   39,700
 Accounts receivable                                                                         2,200                    2,700
 Prepaid expenses                                                                           14,700                    - - -
                                                                                       -----------               ----------
                                                                                         2,538,200                   42,400
                                                                                       -----------               ----------
OTHER ASSETS
 Investment in partnership                                                               6,676,000                4,068,100
 Rental property                                                                            51,000                    - - -
 Inventory                                                                                 850,000                  850,000
 Debt issuance costs and other assets                                                      454,400                   19,700
                                                                                       -----------               ----------
                                                                                         8,031,400                4,937,800
                                                                                       -----------               ----------

         Total Assets                                                                  $10,569,600               $4,980,200
                                                                                       ===========               ==========
</TABLE>





                                        4

<PAGE>   5





<TABLE>
<CAPTION>
                                                                                SEPTEMBER 30, 1996        DECEMBER 31, 1995
                                                                                ------------------        -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY                                                   (UNAUDITED)
CURRENT LIABILITIES

<S>                                                                                    <C>                      <C>    
 Notes payable - related party                                                            $ 80,000                 $ 80,000
 Accounts payable                                                                           73,400                   96,000
 Accrued expenses                                                                           14,400                   79,800
                                                                                       -----------              -----------

             Total current liabilities                                                     167,800                  255,800
                                                                                       -----------              -----------
LONG-TERM DEBT                                                                           4,032,300                  323,000

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES                                             103,000                  106,400

SERIAL PREFERRED STOCK SUBJECT TO MANDATORY
REDEMPTION                                                                                 392,300                  368,300

SHAREHOLDERS' EQUITY
 Serial preferred stock not subject to mandatory redemption
 (maximum liquidation preference, $24,885,382)                                           1,053,000                1,053,000

 Common stock, par value $.40, authorized 25,000,000 shares issued and
 outstanding 11,422,331 and 11,188,997 shares (net of
 22,460 treasury shares)                                                                 4,549,600                4,456,300

 Paid in capital                                                                           140,000                  140,000

 Readjustment resulting from quasi-reorganization at December
 31, 1987                                                                               (1,670,600)              (1,670,600)

 Accumulated earnings (deficit)                                                          1,802,200                  (52,000)
                                                                                       -----------              -----------

         Total shareholders' equity                                                      5,874,200                3,926,700
                                                                                       -----------              -----------

          Total Liabilities and Shareholders' Equity                                   $10,569,600              $ 4,980,200
                                                                                       ===========              ===========
</TABLE>


                                        5

<PAGE>   6



                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                            Three Months                 Nine Months
                                                                            Ended Sept. 30,            Ended Sept. 30,
                                                                            ---------------            ---------------


                                                                        1996         1995             1996         1995
                                                                        ----         ----             ----         ----
<S>                                                             <C>            <C>             <C>           <C>         

NET SALES                                                       $      1,200   $         500   $      1,200  $        500
                                                                  ----------     -----------     ----------    ----------

OPERATING EXPENSES
 General and administrative expenses                                 146,700         141,600        413,900       272,700
                                                                   ---------       ---------      ---------     ---------

INCOME (LOSS) FROM OPERATIONS                                       (145,500)       (141,100)      (412,700)     (272,200)
                                                                   ---------       ---------      ----------    ---------

INCOME FROM EQUITY INVESTMENT
IN PARTNERSHIP                                                     1,001,600         220,000      2,711,200       907,000

INTEREST EXPENSE, NET OF                                             
INTEREST INCOME                                                      169,600          12,400        199,900        30,600
                                                                   ---------       ---------     ----------     ---------

INCOME  BEFORE INCOME TAX
EXPENSE AND MINORITY INTEREST                                        686,500          66,500      2,098,600       604,200


INCOME TAX EXPENSE                                                  ( 16,900)        (13,000)      (176,500)     (103,000)

MINORITY INTEREST                                                      1,100           1,100          3,500         3,500
                                                                   ---------      ----------     ----------     ---------

NET INCOME                                                          $670,700      $   54,600     $1,925,600      $504,700
                                                                   =========      ==========     ==========     =========

NET INCOME APPLICABLE TO 
COMMON STOCK (after accrued preferred 
stock dividends of $15,800, $15,800, 
$47,400, and $44,200, respectively and 
preferred stock accretion of $10,000 and
$24,000 in 1996.)                                                   $644,900        $ 38,800     $1,854,200      $460,500
                                                                   =========        ========     ==========      ========
NET INCOME PER SHARE
   Primary                                                              $.06            $.00           $.16          $.04

   Fully diluted                                                        $.05            $.00           $.13          $.03
</TABLE>



                                        6

<PAGE>   7



                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                                               1996                   1995
                                                                                             --------               ------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                       <C>                  <C>     
 Net Income (loss)                                                                         $1,925,600              $504,700
 Adjustments to reconcile net income to net cash used by operating
 activities:
   Minority interest                                                                          (3,500)               (3,500)
   Stock issued for salaries and benefits                                                      93,300                   ---
   Income from equity investment in partnership                                           (2,711,200)             (907,000)
   Distribution of equity earnings from partnership                                           103,200               100,000
   Interest amortization on long-term debt                                                    227,200                18,000
   Changes in operating assets and liabilities:
     Prepaid expenses                                                                        (14,100)              (27,200)
     Other assets                                                                               5,400                 1,900
     Accounts payable                                                                        (22,600)                37,000
     Accrued liabilities                                                                     (81,200)               102,800
                                                                                           ----------          ------------
         Net cash used by operating activities                                              (477,900)             (173,300)
                                                                                           ----------          ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisitions of rental property                                                             (51,000)                     -

         Net cash used in investing activities                                               (51,000)                     -
                                                                                           ----------          ------------

CASH FLOWS FROM FINANCING ACTIVITIES
 Net short-term borrowings (payments)                                                             ---             (325,800)
 Proceeds from issuance of long-term debt                                                   3,500,000                   ---
 Proceeds from issuance of common stock                                                           ---               352,800
 Proceeds from issuance of preferred stock                                                        ---               167,200
 Preferred stock dividends paid                                                              (31,600)              (28,400)
 Debt issuance and offering costs                                                           (457,900)              (44,200)
                                                                                           ----------          ------------
         Net cash provided by financing activities                                          3,010,500               121,600
                                                                                           ----------          ------------
INCREASE (DECREASE) IN CASH                                                                 2,481,600              (51,700)

CASH-BEGINNING                                                                                 39,700               150,000
                                                                                           ----------          ------------
CASH-ENDING                                                                                $2,521,300          $     98,300
                                                                                           ==========          ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                        7

<PAGE>   8



                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A.  Basis of Presentation - The accompanying unaudited condensed
         consolidated financial statements have been prepared in accordance with
         generally accepted accounting principles for interim financial
         information and with the instructions to Form 10-Q and Article 10 of
         Regulation S-X. Accordingly, they do not include all of the information
         and footnotes required by generally accepted accounting principles for
         complete financial statements. In the opinion of management, all
         adjustments (consisting of normal recurring accruals) considered
         necessary for a fair presentation have been included. Operating results
         for the nine-month period ended September 30, 1996 are not necessarily
         indicative of the results that may be expected for the year ended
         December 31, 1996. For further information, refer to the consolidated
         financial statements and footnotes thereto included in the Registrant
         Company and Subsidiaries' annual report on Form 10-K for the year ended
         December 31, 1995.

     B.  Principles of Consolidation - The consolidated financial statements
         include the accounts of Regency Affiliates, Inc. (the "Company") and
         its 80% owned subsidiaries National Resource Development Corporation
         ("NRDC"), Transcontinental Drilling Company ("Drilling") and
         RegTransco, Inc. ("RTI"). All significant intercompany balances and
         transactions have been eliminated in consolidation.

     C.  Earnings Per Share - Primary earnings per share are computed by
         dividing net income attributable to common shareholders (net income
         less preferred stock dividend requirements and periodic accretion) by
         the weighted average number of common and dilutive equivalent shares
         outstanding during the year. Fully diluted earnings per share
         computations assume the conversion of Series E, Series B, and Junior
         Series D preferred stock during the period that the preferred stock
         issues were outstanding. If the result of these assumed conversions is
         dilutive, the dividend requirements and periodic accretion for the
         preferred stock issues are reduced.

     D.  Inventory - Inventory, which consists of aggregate, is stated at lower
         of cost or market. Liens have been attached to the aggregate inventory
         by the note payable to the related party and the holders of the zero
         coupon bonds. The Company is also subject to a royalty agreement which
         requires the payment of certain royalties to a previous owner of the
         aggregate inventory upon sales of the aggregate.


                                        8

<PAGE>   9




     E.  Income Taxes - Effective January 1, 1993, the Company adopted Statement
         of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for
         Income Taxes," which requires an asset and liability approach to
         financial accounting and reporting for income taxes. The difference
         between the financial statement and tax basis of assets and liabilities
         is determined annually. Deferred income tax assets and liabilities are
         computed for those temporary differences that have future tax
         consequences using the current enacted tax laws and rates that apply to
         the periods in which they are expected to affect taxable income. In
         some situations SFAS 109 permits the recognition of expected benefits
         of utilizing net operating loss and tax credit carryforwards. Valuation
         allowances are established, if necessary, to reduce the deferred tax
         asset to the amount that will, more likely than not, be realized.
         Income tax expense is the current tax payable or refundable for the
         period plus or minus the net change in the deferred tax assets and
         liabilities.

     F.  In March 1995, the Financial Accounting Standards Board issued a new
         standard (SFAS 121), "Accounting for the Impairment of Long-Lived
         Assets and for Long-Lived Assets to be Disposed Of." SFAS 121 requires
         that long-lived assets and certain identifiable intangibles to be held
         and used by an entity be reviewed for impairment whenever events or
         changes in circumstances indicate that the carrying amount of an asset
         may not be recoverable. SFAS 121 is effective for financial statements
         for fiscal years beginning after December 15, 1995. The Company adopted
         SFAS 121 in the first quarter of 1996 which has not had an effect on
         its financial position or results of operations.


                                        9

<PAGE>   10



                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 2.  INVESTMENT IN PARTNERSHIP


         The Company has invested $350,000 for a limited partnership interest in
         Security Land and Development Company Limited Partnership ("Security"),
         which owns and operates an office complex (the "Property"). The Company
         has limited voting rights and is entitled to be allocated 95% of the
         profit and loss of the partnership until October 31, 2003 (the lease
         termination date of the sole tenant of the Property) and 50%
         thereafter. The Company is to receive certain limited cash flow after
         debt service during the lease term and will receive proceeds from the
         sale or refinancing of the Property, if any. The Company is also
         entitled to receive certain management fees relating to the
         partnership.

         Security was organized to own and operate a building of approximately
         717,000 square feet consisting of a two-story office building, a
         connected six-story office tower and approximately 34.3 acres of land.
         The Property was purchased by Security in 1986. The Property has been
         occupied by the United States Social Security Administration's Office
         of Disability and International Operations for more than 24 years under
         leases between the United States of America, acting by and through the
         General Services Administration ("GSA"). Effective November 1, 1994,
         Security and the GSA entered into a nine-year lease (the "Lease") for
         100% of the Property. Security has received an opinion of the Assistant
         General Counsel to the GSA that lease payments are not subject to
         annual appropriation by the United States Congress and the obligations
         to make such payments are unconditional general obligations of the
         United States Government.

         The Company accounts for the investment in the partnership on the
         equity method, whereby the carrying value of the investment is
         increased or decreased by the Company's allocable share of income or
         loss. The investment in the partnership included in the Consolidated
         Balance Sheet at September 30, 1996 was $6,676,000. The income from the
         Company's equity investment in the partnership for the nine months
         ended September 30, 1996 was $2,711,200.



                                       10

<PAGE>   11



                    REGENCY AFFILIATES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Summarized operating data for Security for the three months and nine
         months ended September 30, 1996 is as follows:

<TABLE>
<CAPTION>
                                                                       Three Months               Nine Months
                                                                       ------------               -----------


<S>                                                                    <C>                        <C>       
            Revenues                                                    $3,040,600                $8,673,100
            Operating Expenses                                         (   754,600)               (2,310,600)
            Depreciation and Amortization                              (   541,100)               (1,486,300)
            Interest Expense, Net                                      (   690,500)               (2,022,300)
                                                                        ----------                ----------

                  Net Income                                            $1,054,400                $2,853,900
                                                                        ==========                ==========
</TABLE>

NOTE 3.  LONG-TERM DEBT

         The Company entered into a $3,500,000 Loan Agreement on June 21, 1996,
         with Southern Indiana Properties, Inc. ("SIPI"). The loan specifies a
         regular interest rate of 14% per annum, and also requires payment of an
         additional amount ("contingent interest") which effectively raises the
         interest rate to 20% per annum. The loan does not generally require any
         payments of principal or interest until the maturity date of December
         31, 2005. The Company has the right to make voluntary prepayments, but
         these generally require a prepayment penalty of between 1% and 6%,
         depending when made. The Company is given the right to prepay up to
         $750,000 of the loan during the first 30 months of the loan term
         without prepayment penalty. In the event of such prepayment, no
         contingent interest would be payable with regard to the prepaid amount.

         The loan is secured by a security interest in substantially all of the
         property and property rights of the Company. The lender is given a
         first security interest in any unspent proceeds of the loan, and a
         first security interest in the Company's limited partnership interest
         in Security Land Development Company ("the Partnership Interest").
         However, the lender has agreed to subordinate its position in other
         collateral of the Company, if requested to do so by the Company. If the
         Company prepays $750,000 during the first 30 months of the loan term,
         the lender is obligated to release its security interest in all
         collateral except the Partnership Interest.

         The Company is permitted to use the loan proceeds for acquisitions or
         general corporate purposes but payments to redeem shares or pay accrued
         but unpaid dividends are limited to $750,000 except with the lender's
         consent.


                                       11

<PAGE>   12




NOTE 4.  INCOME TAXES

         As referred to in Note 1, the Company adopted SFAS 109, "Accounting for
         Income Taxes," effective January 1, 1993. The deferred taxes are the
         result of long-term temporary differences between financial reporting
         and tax reporting for earnings from the Company's partnership
         investment in Security Land and Development Company Limited Partnership
         related to depreciation and amortization and the recognition of income
         tax carryforward items.

         At September 30, 1996 and December 31, 1995, the Company's net deferred
         tax asset, utilizing a 34% effective tax rate, consists of:

<TABLE>
<CAPTION>
                                                                       Sept. 30, 1996   Dec. 31, 1995
                                                                       --------------   -------------


<S>                                                                     <C>             <C>        
            Deferred tax assets:
                  Investment partnership earnings                       $ 2,183,000     $ 1,020,000
                  Net operating loss carryforwards                       14,310,000      15,060,000
                                                                        -----------     -----------

            Total deferred tax assets before valuation
                  allowance                                              16,493,000      16,080,000

            Valuation allowance                                        ( 16,493,000)    (16,080,000)
                                                                        -----------      ----------

                  Net deferred tax asset                                $    -0-        $    -0-
                                                                       =============    ============
</TABLE>

         The valuation allowance was established to reduce the net deferred tax
         asset to the amount that will more likely than not be realized. This
         reduction is necessary due to uncertainty of the Company's ability to
         utilize the net operating loss and tax credit carryforwards before they
         expire.

         For regular federal income tax purposes, the Company has remaining net
         operating loss carryforwards of approximately $42,000,000. These losses
         can be carried forward to offset future taxable income and, if not
         utilized, will expire in varying amounts beginning in the year 2000.

         For the three months and nine months ended September 30,1996, the tax
         effect of net operating loss carryforwards reduced the current
         provision for federal income taxes by approximately $400,000 and
         $674,000, respectively. The provision for income taxes for the three
         months and nine months ended September 30, 1996, includes amounts for
         the alternative minimum tax.



                                       12

<PAGE>   13



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Liquidity and Capital Resources.

         The investment in Security Land And Development Company Limited
Partnership should provide the Company with management fees of at least $100,000
per annum until 2003. In the nine months ending September 30, 1996, the
Company's income from its equity investment in Security was $2,711,200.

         On June 21, 1996, the Company closed a loan transaction with Southern
Indiana Properties, Inc. ("SIPI"), as lender, for a $3.5 million zero coupon
loan. The loan has a term of approximately 9 1/2 years, with a final maturity
date of December 31, 2005. Except for certain rights of the Company to make
voluntary prepayments or of the lender to require prepayments in certain limited
circumstances, principal and accrued interest on the loan become due at the
maturity date. The Company intends to use the proceeds of the loan for
acquisitions and/or general corporate purposes. The loan transaction provides
for the loan to be secured by a pledge of the shares of stock of the Company's
subsidiaries, a lien on the loan's proceeds, and a security interest in the
Company's limited partnership interest in Security. SIPI is also given a
security interest in all of the other property of the Company. However, SIPI has
agreed to subordinate its position in other collateral of the Company, if
requested to do so by the Company. Furthermore, if the Company prepays at least
$750,000 of the loan by December 21, 1998, SIPI is obligated to release its
security interest in all collateral except the Company's Limited Partnership
Interest in Security.

         During the quarter, the Company acquired a real estate investment in
Stuart, Florida, consisting of a one-story commercial building located on a
one-eighth acre parcel of land. The property was purchased for approximately
$51,000, and is leased to a single tenant. The Company is continuing to explore
opportunities for the acquisition of real estate investments or operating
companies that will provide additional liquidity and cash flow. The Company
anticipates that such acquisitions would be financed by borrowings secured by
the assets acquired and by the proceeds of the SIPI loan. The Company is also
continuing to explore transactions which would utilize the Company's uncommitted
and remaining net operating losses. There can be no assurances that any such
acquisitions or transactions will be made.

         As part of the 1993 Transaction with NRDC, the Company received a
working capital loan of $100,000 from Statesman Group, Inc., which loan matured
on July 7, 1995 and carries a 10% interest obligation payable quarterly in
arrears.  As of September 30, 1996, the Company had a principal balance 
outstanding on notes payable to Statesman of $80,000.

Results of Operations.

         Operations of Regency Affiliates, Inc. and its subsidiaries in the 
reporting period ending September 30, 1996 were limited to the Company's
ongoing effort to secure acquisitions and/or business combinations to provide
the Company with material operations and cash flow. General and administration
expense includes an expense of $93,300 resulting from the issuance of common
stock to Mr. Nuttall as part of his compensation arrangement with the Company.

                                       13

<PAGE>   14



        The statement of operations reflects the income from investment in 
Security of $1,001,600 and $2,711,200 for the three months and nine months
ended September 30, 1996, respectively, which represents 95% of the net income
of Security Land and Development Company Limited Partnership.

        Interest expense consists primarily of the interest on the loan from 
SIPI (see note 3). Such interest expense of $191,330 for the three months and
nine months ended September 30, 1996, is accreted to long-term debt as no
principal or interest payments are due until maturity. The interest on the SIPI
loan also includes $17,905 due to the amortization of issuance costs incurred
in connection with securing the loan.

        Income tax expense for the nine months ended September 30, 1996, 
includes provisions related to alternative minimum tax for 1996.

                                       14

<PAGE>   15




PART II -- OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

There are no legal proceedings pending against the Company or any of its
subsidiaries.

ITEM 2.    CHANGES IN SECURITIES.

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES.

There have been no defaults in the payment of principal or interest with respect
to any senior indebtedness of Regency Affiliates, Inc.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to the vote of security holders during the reporting
period ending September 30, 1996.

ITEM 5.    OTHER INFORMATION.

As reported on a Form 8-K dated September 25, 1996, Gary K. Nuttall resigned
from the Company's Board of Directors. On August 26, 1996, Pamlyn Kelly, Ph.D.,
a director of the Company, was appointed interim President of the Company and a
search is underway for a new President.

SUBSEQUENT EVENT. On October 22, 1996, the Company repaid its $80,000 (principal
amount) debt to Statesman Group, Inc. The payment totaled $89,955.56, including
accrued interest.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

Report on Form 8-K dated September 25, 1996 
Exhibit 27 - Financial Data Schedule


                                       15

<PAGE>   16


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.




                  __________REGENCY AFFILIATES, INC.__________

                                  (Registrant)


  November 18, 1996                          By: /s/ Pamlyn Kelly, Ph.D.
  --------------------------                     ---------------------------
  Date                                           Pamlyn Kelly, Ph.D.